Prime Minister Hailemariam: “Growth has to be shared to be sustainable”

The Daily Maverick, a Johannesburg based news outlet that delivers a blend of news, information, analysis and opinion, interviewed Prime Minister Hailemariam Dessalegn this week on Ethiopia's economic development. The interviewer, Dr. Greg Mills, concluded by the end of the discussion that "More than a few African countries could learn from this story". Dr. Mills briefly discussed the Prime Minister's own history as well as looking at the influence of former Prime Minister Meles Zenawi before moving onto Ethiopia's economic transformation. The Daily Maverick noted that the concepts of Ethiopia's developmental state and many of the specific advances first began under Prime Minister Meles whose fingerprints were on such success stories as Ethiopian Airlines' support for the floriculture and horticulture industries; or the personal invitation offered during a trip to China in 2011 led to the foundation of Shoe City.

In discussion about the economic transformation, the Prime Minister identified the priorities, emphasizing that "First and foremost, we have to focus on our comparative and competitive advantages in a global setting." He underlined "agriculture as the first priority along with the need to mechanize and get more out of it." Prime Minister Hailemariam said, "We have a strategy to support smallholder farming, and to increase the demand for agriculture. But this alone is not sustainable. We have to think about the next steps." The first stage, he said, was moving from subsistence to commercialized agriculture. This was already beginning to be implemented in the country. One case in point, he mentioned, was floriculture, flower farming. Ethiopia was a country where twenty years ago there was no commercial flower farming. Now it ranked among the top five global suppliers and employed 75,000 people.

The Prime Minister talked about the next priority in Ethiopia's economic transformation: improving skills. The country's vigorous work to attract Foreign Direct Investment was also based on the competitive advantages it had developed including labor-intensive qualities. He said, "We have to be focused on technical and vocational training. Otherwise we will have a young population that is not skilled, has the wrong attitude, and does not understand the market. This involves more than just technical skills. It is about preparing people, supporting entrepreneurs and small and medium size businesses," he said. The investment into Ethiopia from the US alone between 2013 and 2015 totaled $4billion, including a $200-million investment in a flower exporting company, and a $250-million expansion by Coca-Cola.

Dr. Mills noted that "the most important task for the government, however, from the Prime Minister's vantage is to get investors into the 20 industrial parks dotted around the country." The Prime Minister noted that the industrial parks offered comprehensive facilities from programs for one-stop services to proper utilities, environmental management, and training and skills development provisions,. In fact, all the facilities and services appropriate to a modern city. The government was aiming for each park to provide 50,000 jobs.

The Daily Maverick's interview mentioned some of the challenges of running manufacturing businesses in Ethiopia or in an industrial park. These included the need to import virtually all component parts and materials as well as the unreliability of power supplies which, it suggested, would necessitate investment in back-up generators. In fact, of course, power supplies will be solved through the commissioning of the $4.8-billion, 6,000MW Grand Ethiopian Renaissance Dam when completed. In response to the interviewer's question on balancing the momentum of domestic investment with Foreign Direct Investment, the Prime Minister noted the need to source domestic capital as a stimulus for foreign investment, "especially in textiles, garments, footwear, and agro-processing", all priority sectors for manufacturing development. Prime Minister Hailemariam also mentioned the importance of looking for more areas to move into, including biotech and nanotech sectors, which he stressed, requires "engaging in and spending on Research and Development to enable competitiveness."

The Prime Minister was forthright. The success of Ethiopia's transition and its ability to create jobs en masse would hinge on encouraging an indigenous business class as a strong domestic base for growth. There is a shortage of capital and the need to make the political economy more receptive. The Prime Minister said "If it is favorable for rent-seeking and if government officials are involved in patronage and in short-term looting, it discourages the local private sector to invest in productive areas. This demands that we stamp out corruption. But it also means," he added, "that we remove the deficits in infrastructure, rules and procedures, and finance to encourage private sector investment in productive, value-addition activities."

The Prime Minister stressed the individual responsibility of Ethiopians and "need to work on attitudes," underlining that the creation of quality jobs would "take 20 to 30 years at least. He said, "Our biggest constraint is the attitude, the outlook and the exposure of our people. We have a huge rural population. You need to create an understanding among them of the need for value creation in a way that requires everyone working very hard and working differently, for example in the change from subsistence to rural agriculture. You also have to convince people that white collar jobs are not everything, that agriculture can be a modern occupation." He added that this required a good communications strategy to explain the dangers of failing. "Our danger", he said, "is a danger of poverty and of the country's disintegration if we don't tackle these problems, and become active and hard working."

In answer to Dr. Mills' question on his definition of success, the Prime Minister said: "It is about bringing meaningful change in the lives of our people. It's not just about figures or growth, but about changing lives." "Growth," he added, "has to be shared to be sustainable."